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In This Issue...
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Business
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Whole Foods’ Two Planned Stores Increases Competition for Local Shoppers
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Whole Foods’ Two Planned Stores Increases Competition for Local Shoppers
By Linda Fridy
Whole Foods has decided one new Santa Cruz County location just isn’t enough. The natural food grocery chain recently announced plans to move into the empty former Ralphs location on 41st Avenue in Capitola.
Only two months ago, Whole Foods signed a lease for the former Albertsons site on Soquel Drive in Santa Cruz, setting off a debate on what impact it would have on local stores such as New Leaf and Staff of Life.
Whole Foods’ interest in the Santa Cruz market is not surprising, given the success of both local natural food outlets and the Trader Joe’s chain. It was previously interested in the site in Live Oak now occupied by Staples.
New Leaf Wanted Store
The immediate impact of Whole Foods’ 41st Avenue lease on New Leaf is that the local market lost the chance to double the size of its Capitola store.
“After Petco bowed out, the agent for Ralphs contacted us and encouraged us to submit a bid, which we immediately followed through on,” New Leaf co-owner Scott Roseman said. “This was back in December, and after hearing nothing back for many weeks, we contacted the agent, who told us that two national chains were also interested in the site. We let him know of our continued interest, asked what we could do to secure the site, forwarded letters of support from the community, and offered to fly to their headquarters in Cincinnati for a face-to-face meeting to explain all the good reasons to lease to a successful local business.”
These efforts were apparently unsuccessful, and Whole Foods won the lease.
The storefront has been sitting empty for a year since Ralphs closed its Northern California stores. The animal supply chain Petco had been working with Capitola to allow pet grooming and negotiating store design before it backed out of the lease.
Big Stores, Big Heart?
Whole Foods claims 194 stores on its website, stretching across the United States, Canada and even the United Kingdom. The size of the stores is also vast, on the same scale as other mega-grocery chains. The 41st Avenue location is on the small side at just over 23,000 square feet compared to its average of 32,000.
In comparison, New Leaf has five stores in the County, with one 11,000-square-foot site just down 41st Avenue from its soon-to-be competitor, while Staff of Life has a single eastside Santa Cruz location. Trader Joe’s website boasts more than 250 stores in 20 states and two locally.
Capitola city senior planner Ryan Bane said that the chain store does not need a permit to move in to its new location, since the building is still registered for grocery store use.
“They have indicated that they are planning exterior improvements,” Bane said, which would require planning commission approval, as well as permits for any tenant improvements.
Whole Foods emphasizes its environmental and community support efforts on its website. It has purchased enough renewable energy credits from wind farms to offset all of its North American electrical use, and donates 5 percent of net profits.
New Leaf owners claim that they give back twice as much.
“Since the day we began, we have had a commitment to contribute 10 percent of our profits to the community, and we have always exceeded that goal,” Roseman said.
Whole Foods Both Praised & Criticized as Employer
Reports on the way Whole Foods treats employees vary widely. The company annually makes Fortune magazine’s list of “Best Companies to Work For,” and is currently ranked number five overall and number two for large companies. However, numerous Internet reports cite CEO and founder John Mackey’s vocal opposition to unions and claim that workers who try to organize are fired.
No one accuses Mackey and high-level management of making excessive salaries. The company has a salary cap, and recently Whole Foods announced Mackey is reducing his salary to $1 and his future stock options go to the company’s two foundations. Its Animal Compassion Foundation focuses on quality of life for farm animals and the Whole Planet Foundation works with rural communities to fight poverty.
Bracing for Competition
New Leaf has already gone on the offensive, emphasizing its local connection in its monthly flyer. The stores highlight both locally grown produce and products from community sources with special local labels.
“When any new competitor enters the market, they will need to take business from other competing retailers, and we expect that we will not be immune from this,” Roseman said. “We will continue to offer the best quality in local and organic, and continue our support for our community.”
The local store group has expansion plans of its own beyond its attempt to move to the former Ralphs. It plans to move its Westside Santa Cruz store to a larger location and will open its first out-of-county store in Half Moon Bay.
Whole Foods representatives did not respond to a request for an interview by press time.
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